The Michael Vamosi Corporation Operates One Central Plant That Has

Essay

The Michael Vamosi Corporation operates one central plant that has two divisions, the Lamp Division and the Flashlight Division. The following data apply to the coming budget year:

$$\begin{array}{l}\text { Budgeted long-nun usage per year: }\\\begin{array} { | l | l | l | l | } \hline \text { Lamp Division } & \text { 800hours } \times 12 \text { months } = & 9,600 \text { hours per year } \\\hline \text { Flashlight Division } & 450 \text { hours } \times 12 \text { months } = & 5,400 \text { hours per year } \\\hline\end{array}\end{array}$$
Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Lamp Division was 700 hours and the Flashlight Division was 400 hours for the month of June.
Required:
a. If a single-rate cost allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month?
b. For the month of June, if a single-rate cost allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume actual usage is used to allocate operating costs.
c. If a dual-rate cost allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month?
d. For the month of June, if a dual-rate cost allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division?